Financial Crime World

Financial Compliance in Saint Kitts and Nevis: A Risk-Based Approach

Introduction

The Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) legislation is a critical aspect of financial regulation in Saint Kitts and Nevis. The Financial Services Regulatory Commission (FSRC) is responsible for ensuring that all regulated businesses comply with these requirements.

Risk-Based Supervision Framework

In 2015, the FSRC-Nevis Branch adopted a Risk-Based Supervision Framework (RBS), which was revised in 2017. This framework applies to both off-site and on-site examinations of regulated entities.

Key Components of the RBS Framework

  • Comprehensive on-site examinations are conducted to ensure that AML/CFT legislation is being complied with and that the entity is operating in a sound financial position.
  • Examiners assess whether the entity has established policies and procedures to identify and manage risks associated with money laundering and terrorist financing.

What Examiners Look for During On-Site Examination

  • Verification of customer information
  • Obtaining and maintaining records of beneficial owners (BOs)
  • Adequate Know Your Customer (KYC) and Customer Due Diligence (CDD) documents
  • Accurate records, including copies of customers’ identification documents, letters of reference, and proof of address
  • Conducting customer risk assessments, source of funds and wealth declarations, and monitoring transactions for suspicious activity

Ensuring Compliance with AML/CFT Legislation

Examiners review these records and assess the entity’s policies, practices, procedures, and internal controls to ensure compliance with AML/CFT legislation. This includes evaluating ongoing monitoring programs, training schedules, suspicious transaction reporting, record-keeping systems, and retention periods.

The Role of Risk-Based Approach in FSRC

The risk-based approach ensures that resources are targeted at entities that pose the greatest risk to the financial system. Entities operating in a satisfactory manner will require less frequent monitoring than those with weaknesses and deficiencies.